Complete your VAT Reconciliation report with a conversion balance
Complete your VAT Reconciliation when your organisation has a VAT conversion balance. We'll use an example to show you how it works.
Before you start, see how Xero builds the VAT Reconciliation report, and where the figures come from.
- Your organisation's conversion date is 1 April 2016.
- You're on the standard VAT accrual scheme, lodging VAT returns quarterly.
- Your last VAT Return before you converted to Xero was for the quarter ended 31 March 2016. You completed this VAT Return outside Xero.
- You've entered your conversion balances into Xero, including the details of invoices and bills outstanding at your conversion date. Your oldest outstanding invoice or bill is dated 20 November 2015.
Your conversion balance for VAT is $6695.00 credit (you owe VAT to HMRC). This balance is made up of:
- VAT on outstanding invoices $1111.49 (credit)
- VAT on outstanding bills $903.96 (debit)
- Other VAT outstanding $6487.47 (credit)
Follow these two steps to understand how the reconciliation works, using the above example.